The Australian Energy Market Commission published a consultation paper (Paper) on 15 March 2012 which details the process for consideration of a rule change proposed by the Australian Energy Market Operator (AEMO) to create a new category of market participant called a "Small Generation Aggregator".

The proposed new rule will assist operators of multiple small generation units to participate in the National Electricity Market (NEM) without requiring registration of each individual unit. This will save significant costs and administrative time. AEMO estimates 50 small generators may enter into the market in the first three years if this rule is implemented.

The Paper indicates that encouraging small generators to participate in the NEM:

  • on the positive side, could:
    • reduce the magnitude and duration of spot price peaks
    • provide an additional or alternative source of revenue for small generating units
    • improve the business model of aggregators
    • support network reliability
    • reduce spending on network infrastructure
    • reduce the wholesale electricity price.
  • on the negative side, may:
    • impact security, reliability and safety issues for network service providers
    • reduce the predictive capacity of demand
    • impose an additional cost of A$600,000 to AEMO to implement the framework.

AEMO is seeking stakeholder views on the Paper by 12 April 2012.

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